More people staying solvent

Updated 7:59 pm, Thursday, January 3, 2013

The number of South-Central Texans filing for personal bankruptcy tumbled by 10 percent for the second straight year.

The drop coincides with the area's strengthening employment rate and the shrinking number of foreclosures.

There were 3,955 consumer bankruptcy filings last year in the San Antonio division of the U.S. Bankruptcy Court for the Western District of Texas. That compares with 4,387 filings in 2011 and 4,880 in 2010.

It was the first time since 2008 that the number of consumer filings didn't top 4,000.

Business bankruptcies in South-Central Texas fell by more than a third last year to 64 from 101 in 2011. The San Antonio division is made up of Bexar and 20 other counties that extend west to Terrell and south to Dimmit.

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“I guess all things considered, the economy is not as bad as it's been,” said Raymond Battaglia, a commercial bankruptcy lawyer with the law firm Strasburger Price Oppenheimer Blend in San Antonio.

Several factors are at play in the decrease, local bankruptcy lawyers say.

The number of people out of work is falling. The San Antonio area added 21,000 nonfarm jobs over the 12 months ended Nov. 30, a 2.5 percent annual growth rate, figures from the Texas Workforce Commission show. The local unemployment rate fell to 5.8 percent in November, the lowest rate in nearly four years.

Still, San Antonio bankruptcy attorney Joseph W. Shulter said he still sees many clients who are either unemployed or underemployed.

“It appears the primary driving force (for filing bankruptcy) was either loss of job or the inability to obtain a job comparable to a prior job,” said Shulter, who's with the Davis Law Firm.

Also contributing to the decline in bankruptcies is a drop in the number of foreclosures. There were 13,600 residential and commercial foreclosure postings combined last year, down 9.5 percent from the approximately 15,000 in 2011.

“We're seeing fewer and fewer mortgage problems than we saw two or three years ago,” said J. Todd Malaise, a San Antonio bankruptcy lawyer with the Malaise Law Firm. “The people that got bad loans or shouldn't have received loans already went through the foreclosure process.”

Struggling homeowners often turn to Chapter 13 to save their house from foreclosure, Malaise said. Chapter 13 cases have typically accounted for more than half of all consumer bankruptcy filings in the San Antonio division.

Banks also have been more willing to grant mortgage modifications, which also has helped cut down on bankruptcy filings, Shulter said.

The drop in regional bankruptcy filings appears to be in line with what's happening at the national level.

While national figures weren't immediately available, the American Bankruptcy Institute last month stated bankruptcies were on pace in 2012 for their lowest total since the financial crisis of 2008.

The ABI attributed the decline to a sustained drop in consumer spending by households that have been working their way out of debt.

The number of business liquidations fell by more than half to 23 last year in the bankruptcy court's San Antonio division, while Chapter 11 reorganization filings fell about 16 percent to 41.